What went wrong with "New Coke"—and could a newer Coke transform obesity?​

Today, Coca-Cola’s 2020 vision includes doubling the business—but it goes beyond that. In recent years, the company has made exciting commitments to goals like achieving water neutrality and transitioning to a 100 percent plant-based bottle. It should add to these goals one more: replacing its top brands with no-calorie versions—not by adding a new diet brand, but by changing the formula and blend of the existing brand.

So let’s assume that Coca-Cola recognizes this four-acre-a-year problem and chooses to tackle the bold challenge of changing the formula of its number one brand: Coca-Cola. What would an effort like this take? Three things:

Good Science - A culmination of Coca-Cola’s artificial sweetener research, which began well before Diet Coke was introduced in 1982.

Good Marketing - A slow-burning marketing campaign that champions the company’s move without disrupting happy customers.

Ready Consumers - A real commitment from consumers to actively support a bold but measured approach to corporate responsibility.

How would it work? First, let’s look at how it didn’t work by revisiting the last time the company tried to change the formula.

by Brendan Steidle

An advertisement for New Coke, circa 1985

Lessons of New Coke

In the 1980s, Pepsi was gunning for Coca-Cola. The company’s once-commanding lead in the market was faltering, while the sweeter and smoother taste of Pepsi was surging. Executives knew that something had to be done. Pressure was mounting, not only from shareholders, but also from the bottling companies whose responsibility it was to turn the syrup manufactured by Coca-Cola into an actual beverage. In response, a new formula was developed; one that was sweeter and took out some of the bite of the classic recipe by reducing phosphoric acid and vanilla. In the company’s internal taste tests, New Coke fared better against Pepsi. The testing seemed conclusive, but now top executives needed to pull the trigger. Questions swirled about how to make the introduction. There seemed to be a few options:

Introduce New Coke as a separate brand.

Change traditional Coke without telling anyone.

Change it and tell everyone with a big marketing push.

The separate brand idea fell flat, since bottlers were already complaining about a multitude of brands. Switching without telling anyone would almost surely result in an uproar, since the flavors were noticeably different. The best option seemed to be a marketing blitz introducing the change. This was all laid out in a meeting in March of 1985, and the President of Coca-Cola USA was ready to move forward, but another employee spoke up, arguing the risk of a backlash and suggesting another tactic: a gradual change of the flavor of Coca-Cola, using a series of blends between the old and new formula to transform the taste of the soda slowly and imperceptibly. This unannounced change wasn’t without precedent. In the 1960s, the company had essentially used the same tactic to gradually bring down the amount of caffeine in the soda. At the end of the process, Coke had just 1/3 the caffeine content it had in the beginning.

Others in the room were skeptical. Chief among them was the company’s head of research and development, who argued that at some point in the gradual change, the public would notice the difference. The flavor transition would reach a kind of threshold and the company would have to answer for itself. The argument was so compelling that company chairman Roberto Goizueta walked out the door ready to kill the idea—not only of gradual change—but of any change at all. New Coke was dead in the water.

But just two weeks later, on April 2, recent sales trends convinced the Chairman to reverse his decision, and the infamous choice was made to openly change the formula. The company would begin in North America, gauge the response, and then roll it out across the world. In a staged presentation at Lincoln Center with 700 journalists present, Coca-Cola made its announcement.

The initial reception was positive, with sales up 8 percent. But a very vocal minority—particularly in the southern United States, picked up momentum. They disliked the new flavor but even more, the fact that the old “real” Coke was gone. Coca-Cola had been a source of southern pride ever since the Atlanta-based company was started in 1886. The new flavor was booed at the Houston Astrodome, derided in newspaper articles, the butt of jokes by comedians and talk-show hosts, and the target of a lawsuit by the hastily-formed organization ‘Old Cola Drinkers of America.’ And worse, bottlers complained that they didn’t know how to sell it, since Coke had always represented something “genuine” and unchanging—a reputation it used as a selling point even a hundred years earlier:

Thousands of letters poured in and the public sentiment began to shift against the change. Even if you thought New Coke tasted good, it was in bad taste to say so.

By July, the company decided that it was going to reintroduce the original formula. At the Thursday announcement, company president Don Keough read customer complaints and was very apologetic, telling the audience: “All the time and money and skill poured into consumer research on the new Coca-Cola could not measure or reveal the deep and abiding emotional attachment to original Coca-Cola felt by so many people.” The change made front-page news across the country.

The original formula was eventually renamed “Coca-Cola Classic” and the new one sold under the banner of Coca-Cola II until it was discontinued in 2002. The abiding lesson seemed to be this: The majority of people may have liked the new product, but they didn’t like the change from the old product. That raises a compelling question: what if Coca-Cola had gradually transitioned the taste without telling anyone? Consumers would get the benefits of a better taste without having to see their favorite brand dissolve. Would it have worked?

In 1998, two researchers from the Department of Food Marketing at Saint Joseph’s University set out to answer that question. With both New Coke and Coca-Cola Classic on the market, they blended the flavors in variations and invited test subjects to determine the viability of a gradual transition. The conclusions were threefold:

Test subjects could determine the difference between Coke and New Coke.

Test subjects could notice a difference when the transition was divided into 4 stages.

Test subjects could not notice a difference when the transition was divided into 8 stages.

Most importantly, subjects never reached a threshold in the middle of the process that made them notice the difference. In short: Coca-Cola could have successfully transitioned Coca-Cola to New Coke in a series of stages without a public unveiling. This shouldn’t be surprising. As the researches note in their report:

“Ongoing product reformulation is a common occurrence in the food and beverage industry motivated by cost reduction, quality improvement, competitive behavior, and ingredient substitutions necessitated by supply shortages, new sources, and new technology.”

The Zero Calorie Transition

This raises an exciting possibility: what if Coca-Cola employed the gradual-change approach to reduce the calorie content to zero? After all, changing for health reasons is not unprecedented. In the 1990s, fat and sodium content across a large swath of American foods was drastically reduced in response to FDA label changes. These reductions were accomplished gradually and made food healthier without announcement or consumer complaint.

In their tests, the researchers found that the transition to New Coke could be accomplished—and undetected—with just an 8-step process. How much time was required to pass in-between these steps? To design the time intervals, you have to consider what scientists call “flavor memory”—our ability to remember distinct taste differences over time. According to research, “flavor memory” of slight differentiations is surprisingly short. In 1996, researchers asked respondents to remember the intensity of sweetened beverages. After tasting the drinks, they were asked one hour later to choose the intensity. Others were asked one week later. And others still, six weeks later. The conclusion: People were only accurate if you asked them one hour later. By the next day, they had no idea. This suggests that the time interval between transitions doesn’t have to be great. At least when you consider taste.

But only considering taste is a mistake. As the New Coke fiasco reminds us, the issue is rarely about taste. Committed consumers do not like change. Taste is only one kind of change. In a calorie reduction, change can also be detected on the label. If the reduction in calories appears too sudden, people will notice and complain. So a process with more than 8 steps—over a prolonged period—is probably the most prudent course. But just imagine what would happen by the end of it:

Coca-Cola sells about 95 billion servings of full-calorie beverages in the United States every year. That adds up to 8.8 trillion calories. Just how much is that? Well, there are about half-a-million calories in the average cow, so that’s enough to account for 17 million cows—or more than half of the cows used for beef production in the entire country. What would that look like in one place? A herd that big would take up 34 square miles. That’s enough to fill every inch of Manhattan—but only if you demolished every building first and made it flat. And then you’d still have cows spilling into the rivers, because Manhattan’s only 33 square miles.

Cutting a Manhattan-sized slab of beef from the country’s plate would be like cutting 14 days worth of food from the diet of every American each year. Tell me that cutting two weeks-worth of food from your diet—that’s breakfast, lunch, and dinner—wouldn’t help you lose weight. For kids, actual food would become their number one food-group, rather than a beverage. And millions of Americans would see their clothes become a bit more roomy. Imagine a great clothing boom sweeping the country. But saving our health is only the beginning. Action like this would go far in changing the way America thinks about corporate responsibility. After all, saving polar bears is commendable, but saving consumers is sweeter—even if we’re ultimately saved with artificial sweeteners.

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Notes and Sources

A special note regarding the calculation comparing Coca-Cola's calories to the US beef industry. Here's how the conclusions were reached: On page 12 of Coca-Cola's 2011/2012 Annual Review, the company says that it provided 403 servings of 8 ounce beverages per capita in the USA in 2011. In the same report, the company states that about 1/4 of its case volume is from low-calorie or no-calorie beverages, which means we can calculate that the company sold about 302.25 full-calorie beverages per capita. With a US population of 315 million, that means the company sold 95 billion servings of full-calorie, 8 ounce beverages. There are about 94 calories in an 8-ounce beverage, meaning that the company sold about 8.8 trillion calories to Americans. With 500,000 calories of consumable meat in the average beef cow, that comes to 17 million cows, or more than half of the 30.9 million beef cows in the US. Cows take up about 2 square meters of space, and when they're standing in a tight-group, there's likely about another 2 square meters of space around each cow (making 4 square meters total). This means that 17 million cows would take up about 34 square miles. Manhattan is 33.

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